Are we too pessimistic? Cost projections for solar photovoltaics, wind power, and batteries are over-estimating actual costs globally

Abstract

Cost projections of renewable energy technologies are one of the main inputs for calculating energy transitions. Previous studies showed that these projections have been overestimated. In this study, we update the assessment of cost projections, comparing over 40 studies and 150 scenarios, between 2020 and 2050 of the main renewable energy technologies: utility-scale solar photovoltaics, rooftop solar photovoltaics, onshore and offshore wind, and Li-ion batteries. Generally, all studies reviewed expect a strong reduction in the levelised costs and capital expenditures, though with different reduction levels. While the revised cost projections have improved and are more aligned with historical trends, they are still too pessimistic. Most cost projections for 2050 are in the same ballpark as costs already observed today. Notably, the investment costs for utility-scale photovoltaics in the U.S. for 2050 are projected to be 30 % higher than current costs. We also observed a large disparity between cost projections, particularly for solar photovoltaics and offshore wind, where the most optimistic investment cost projections are up to four times lower than the most pessimistic. In the case of levelised costs, this dispersion can somewhat be explained by underlying issues such as arbitrary discount rate assumptions that fail to account for local costs of capital and risks. To sum up, global renewable energy technology costs are decreasing faster than what studies assume, highlighting an ongoing pessimism in cost projections.